Why building budgets blowout (and how to protect your new home build)
You've done everything right.
You've chosen a reputable builder. You've set aside an emergency buffer. You're being careful with your design selections.
But here's what I see happen every single week: clients come to me mid-build, shocked that their build has blown out by $30k, $50k, sometimes $80k and they have no idea where it came from.
They thought they were being smart. They thought the "industry standard" contract would protect them.
But here's the truth nobody tells you: your budget isn't protected by your design. It's protected by your building contract.
The false assumption: "If I'm careful with selections, I won't have cost blowouts"
Most people building a home believe that staying on budget is about making smart decisions during the build:
Not changing your mind about finishes
Keeping variations to a minimum
Choosing materials within your budget
And yes, those things matter. But here's what I've learned from reviewing hundreds of building contracts:
The biggest cost blowouts don't come from your choices. They come from clauses in your contract that allow for price increases you never saw coming.
Let me share a real example.
What my client Sarah thought would protect her budget
Sarah signed her contract in early 2024. She had a fixed-price contract with a well-known builder in regional Victoria. She was careful with every selection, stayed within the allowances, and didn't request any changes.
Six months into her build, she received a variation claim for $18,000.
The reason? Material price increases and council approval delays.
Sarah was stunned. She had a "fixed-price" contract. How could the price change?
When we sat down and went through her contract together, here's what we found:
A clause that allowed the builder to claim additional costs if materials increased by more than 5%
Another clause that allowed delay costs if council approvals took longer than 60 days
A third clause that made her responsible for obtaining finance within a specific timeframe—or face penalty costs
Sarah had signed a "fixed-price" contract, but the price was only fixed if certain conditions were met—conditions buried in the fine print that nobody explained to her.
This is the pattern I see over and over: people think "industry standard" means "safe." But the template isn't the risk, the details are.
The truth: your contract makes or breaks your build
Here's the insight that changes everything:
Every cost blowout, every delay, every dispute during your build traces back to a clause in your contract that either protected you or left you exposed.
Let me break down the three contract clauses that cause the most damage:
1. Price escalation clauses: the hidden trap in "Fixed-Price" contracts
You think you have: A locked-in price that won't change.
What you actually have: A price that's fixed unless certain triggers are met - material price increases, labour cost rises, delays beyond the builder's control.
What really creates budget certainty: Knowing exactly which scenarios allow for price increases, having caps on those increases written into your contract, and understanding your obligations to prevent triggering them.
When I worked with Olivia on her Melbourne build, we identified five different clauses in her contract that could trigger price increases. We negotiated caps on three of them and created a tracking system for the other two. Her build finished within $4,000 of the original quote.
2. Delay cost clauses: who pays when things take longer?
You think: Delays are the builder's problem.
What's actually true: Most contracts make you responsible for delays caused by council approvals, weather, material availability, and finance timing.
What really prevents delay costs: Understanding exactly what constitutes a "builder delay" versus a "client delay" in your specific contract, knowing the daily cost of delays, and having a proactive plan to avoid the triggers.
I recently worked with a couple whose contract charged them $180 per day for delays. Council approvals took 4 months instead of 2. That's an extra $10,800 - and they had no idea this clause existed until the bill arrived.
3. Variation approval processes
You think: I'll just approve variations as they come up.
What actually happens: Conversations happen verbally on site, emails fly back and forth, and suddenly you're stuck with costs you never formally approved - but the contract says you're responsible for.
What really creates control: A contract that specifies exactly how variations must be documented, approved, and priced before work begins - plus a system to track every single conversation and cost in real-time.
Why understanding your contract is your superpower
Here's what changes when you know what's in your contract before you sign:
You can negotiate caps on price increases
You can clarify who's responsible for different types of delays
You can set up systems to prevent the triggers that cause cost blowouts
You can spot the clauses that put unfair risk on you—and push back
A quality build comes from a quality contract.
Not from choosing the right tiles. Not from being "nice" to your builder. From understanding the document that governs every single decision, cost, and timeline on your build.
What to do next
If you're about to sign a building contract - or you've already signed but your build hasn't started there's still time to understand what you've agreed to and protect yourself.
This is exactly why I created my Building Contract Health Check.
In our session together, we'll go through your contract line by line. I'll show you:
Exactly which clauses create risk for cost blowouts and delays
What you're actually responsible for (and what your builder is responsible for)
The specific triggers that cause price increases—and how to avoid them
Whether your contract is fair or loaded with risk you don't need to accept
What to negotiate before you sign (or how to protect yourself if you've already signed)
I work with clients across all of Australia—Victoria, NSW, Queensland, ACT, Tasmania, WA, and the Northern Territory—reviewing HIA and Master Builders contracts.
My goal is simple: I want you to sign your contract with complete confidence that you understand what you're agreeing to, what risks you're taking on, and how to protect your budget and timeline.
Because here's what I know after years of doing this work: the clients who understand their contracts don't just save money. They have better builds. Less stress. Fewer disputes. And they actually enjoy the process.
Learn more about Building Contract Health Checks
Your contract is either your protection or your biggest risk. Let's make sure it's working for you.
Happy building! 💚
Annelyse
Happy building! 💚
Thanks for reading and catch you on my next post :)
Annelyse
